When two-thirds of your work force are freelancers, every staffer has to be a manager

June 11, 2014
June 11, 2014

This item has been corrected

When you walk into Elance-oDesk’s offices in Silicon Valley, you don’t see a person sitting at a desk. Instead you see two telepresence robots, staffed by freelancers working from across the country.

“It’s an awesome example of how much we can change work,” Elance-oDesk CEO Fabio Rosati told Quartz.”We have a receptionist who’s not even here.”

Elance-oDesk is one of the world’s biggest online marketplaces for freelance employment. It’s more than just a job board: the site also serves as a payment platform and project management tool. The result of a merger between Elance and oDesk completed late last year, the company has brokered more than $2 billion in payments to freelancers and hosts 8 million people looking for work.

And it doesn’t just enable freelancers. It also practices what it preaches. The company only has about 240 full-time employees, but supplements that with 500 freelancers.

“They choose how many hours they work, and they decide when,” Rosati says. “As a result, we are a very small company in terms of head count, but we serve a huge community 24/7.”

“Choreographing” freelancers to increase productivity

With that ratio of freelance to staff work, employees at the company are effectively required to be managers, using others to support and enhance their own work. In customer service, for example, about 20% of the work is done internally, but the rest is remote.

“Virtually every contributor has one or two collaborators online,” Rosati says. “If you’re doing market research, you don’t do it all alone, you do it with others online. If you’re producing content, you choreograph a group online.”

The result is that each worker can get more done than a single employee elsewhere, helping keep headcount down. Employees can hand off tasks they can’t get done or things they need early to someone in another timezone, for example. It’s a model that expects a lot from employees.

“One of the criteria (when hiring) is whether we think you can be a good choreographer,” Rosati says. “We talk about music a lot. We talk about jazz ensembles when we hire an employee. Can this person be a good conductor? Can they choreograph others?”

Following the lead of cloud computing 

The goal is to do for the workplace what Amazon Web Services did for computing. Instead of investing in building and housing expensive servers for themselves, companies rent computing power from Amazon. That was a major enabler of today’s startup boom.

Elance-oDesk’s model negates the need for work to be done in a specific time or location; it can be done anywhere or as needed. Labor hours are procured without the months of investment required to hire a full-time employee or the cost of maintaining a workspace.

Freelance work already existed, of course, and companies took advantage. The potential game-changer, Rosati says, is a larger scale and a much better user experience on both ends. When companies are able to access a pool of workers pretty much immediately, they’re much more likely to do so. The bigger the marketplace gets, the more appealing it is.

“How long does it take to hire somebody?” Rosati asks. “Weeks or months. Imagine what happens when you hire somebody in 24 hours.”

Challenges to changing the model

The company has substantial work to do before that vision becomes the reality across the board. It has to create better, quicker matches between people and companies.

Right now, about a quarter of jobs Elance-oDesk’s job listings are filled within a day, and the average is three days. The company is making substantial investments in data science to make that faster. It’s also building out better technology for users to track their work and collaborate. To succeed, it needs to better serve large customers by building private talent pools of vetted workers.

And there’s an argument to be made that companies lose a lot of skill and institutional knowledge by reducing the number of full-time employees gathered in one place. For employees, though they gain flexibility, they lose out on job security and benefits. And companies hiring freelancers submit to less oversight when it comes to diversity, gender equality, and hiring practices.

Still, Rosati’s company and management model are a bet that our workplaces are likely to become more and more dispersed.

Correction (June 11): An earlier version of this article incorrectly stated the amount the combined companies have paid out to freelancers as $1 billion. More than $2 billion has been paid overall.

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